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Big Tech companies attempting to avoid bankruptcy with massive layoffs




Big Tech companies are rapidly shedding their employees to save themselves. With rapid inflation and job losses in financial and retail sectors, tech companies such as Apple, Google Instagram and Twitter have also begun massive layoffs in order to avoid bankruptcy.

According to a report from the Verge, Big Tech investors are “evaluating their investments, given the current slowdown of the U.S. economy” writes Foreign Desk News. Statements from Meta, Google, Microsoft, Salesforce, Amazon, and others, explain the layoffs are directly due to current economic circumstances, uncertainty in the future, and changes in revenue.

Foreign Desk News adds: “According to experts, many of these firms have billions of dollars in reserves but have not used them yet to support operations. One of the tools used for measuring tech companies’ investment value is the revenue per employee, and with the majority of staff hired during the COVID-19 pandemic, current employee revenue has decreased.”

Experts and analysts assess whether layoffs are the answer to actually save tech companies. Layoffs come with billions of dollars and severance pay, and fewer salaries may not necessarily result in lower company costs.

Foreign Desk News adds that experts point out that there is little evidence that layoffs improve profitability and can even do the opposite and hurt it.

“Oftentimes companies do not have a cost problem,” said Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business, to the Verge. “They have a revenue problem. And cutting employees will not increase your revenue. It will probably decrease it.”

The Verge report notes:

According to past studies, companies that closed their businesses and enacted layoffs had greater returns than those that only did layoffs. During the 2020 COVID-19 pandemic, tech companies that enacted layoffs did not affect their company’s stock prices.

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